American Foods, Inc. v. Goodson Farms, Inc.

Citations: 275 S.E.2d 184; 50 N.C. App. 591; 1981 N.C. App. LEXIS 2171Docket: 805SC638

Court: Court of Appeals of North Carolina; February 17, 1981; North Carolina; State Appellate Court

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Defendants in American Foods, Inc. v. Goodson Farms, Inc. argue that the trial judge incorrectly denied their motion for summary judgment and struck their Third Defense, citing G.S. 45-21.38. This statute prohibits mortgagees from obtaining deficiency judgments on purchase money mortgages executed after February 6, 1933. The defendants reference Realty Co. v. Trust Co., which established that a purchase money mortgagor is protected under G.S. 45-21.38, preventing the seller from pursuing a suit on the promissory note instead of foreclosure on the deed of trust.

However, the current case differs from Realty, as the collateral involved is solely real estate, and the instruments in question do not explicitly indicate they are purchase money instruments. In this case, title to the real estate was held only by Lewis Nursery, Inc., and foreclosures were executed against it. The defendants lack a record title interest in the property and there is no evidence of a trust relationship. Additionally, the endorsements by the defendants served merely as extra collateral requested by the plaintiff, rather than establishing a purchase money mortgage status.

The trial judge's decision to deny the defendants' motion for summary judgment and to strike their Third Defense was upheld. The defendants argued that the judge erred by also striking their Fourth Defense, citing G.S. 45-21.36, which allows a defendant facing a deficiency judgment to argue that the property sold was worth the debt amount or that the sale price was significantly below its true value. However, the court noted that the statute only protects individuals with a property interest in the mortgaged property, as established in Trust Co. v. Martin. The defendants, who claimed to be comakers of the note, lacked a property interest in the corporation that held the title, Lewis Nursery, Inc. Consequently, the court rejected their argument to extend the statute's protections to them. 

The court also affirmed the trial court's allowance of the plaintiff's motion for summary judgment, despite the defendants claiming the award was unsupported by evidence. A minor discrepancy of $3,692.00 between the relief sought in the complaint and the amount stated in the plaintiff's vice-president's affidavit was deemed insignificant, particularly since it favored the defendants. The court cited Rule 54(c), indicating that a final judgment should grant the appropriate relief regardless of the specifics requested in the pleadings. Lastly, the defendants questioned the sufficiency of evidence for the judgment, relying solely on the testimony of the plaintiff's vice-president, Mr. Wilson.

Wilson filed three affidavits and provided testimony indicating familiarity with the plaintiff's records regarding the amount owed on the note. The trial court's decision to grant the plaintiff's motion for summary judgment was upheld, as the plaintiff's evidence was sufficient and the defendants failed to present any affidavits or evidence disputing the amount, relying solely on a general denial which is inadequate to contest summary judgment under G.S. 1A-1, Rule 56. The court also dismissed the defendants' counterclaim related to the Purchase Agreement, which stipulated the transfer of Hy-Yield, Inc. stock was contingent upon obtaining consent from Ameribrom, Inc. This consent was not obtained, and attempts to negotiate a new agreement were unsuccessful, leaving the original terms in effect. As a result, the plaintiff had no obligation to transfer the stock. 

Additionally, the plaintiff counter-appealed, arguing that the trial court erred by limiting its attorney fees to $4,500. The note in question allowed for reasonable attorney fees, and the plaintiff’s attorney asserted that reasonable fees should amount to $60 per hour for 69 hours worked, totaling $4,140. However, the trial judge's award of $4,500 was deemed excessive based on the statutory provision G.S. 6-21.2, which suggests a fee of fifteen percent of the outstanding balance on the note. The trial judge's decisions were affirmed, with Judge Wells concurring in part and dissenting in part, specifically agreeing with the affirmance of the summary judgment and the attorney fees awarded.

Dissenting from the majority opinion, the author argues against granting summary judgment in favor of the plaintiffs regarding the defendant's counterclaim. The defendant's claim centers on the assertion that the plaintiffs failed to convey all outstanding capital stock of Hy-Yield, Inc., a subsidiary, as promised in the purchase agreement. This failure has allegedly caused substantial damages to the defendant. The defendant provided evidence to support its claim, while the plaintiffs contended that the stock transfer was contingent upon two conditions: obtaining consent from Ameribrom, Inc. for the ownership change in accordance with the Joint Venture Agreement, and the plaintiffs being released from their guarantee of Hy-Yield's obligations under the agreement. The evidence presented raised genuine issues of material fact concerning whether Ameribrom's consent was necessary and whether the joint venture agreement had been terminated prior to the lawsuit, thereby potentially nullifying the guarantee condition. Consequently, the dissent argues that the counterclaim should not have been resolved through summary judgment.